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Is Visa taking 2% out of all my transactions?

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Re: Is Visa taking 2% out of all my transactions?

#21

Post by lotsofpulp »

andymoe wrote: post #3

Typical credit card transactions fees range from 1.5-3.5 percent so the 2 percent is not a terrible deal and businesses usually just eat it in retail and work it into the prices. Usually there is language in the contract with the processor agreement that prevents businesses from charging different prices for credit card vs non credit card buyers.

> Usually there is language in the contract with the processor agreement that prevents businesses from charging different prices for credit card vs non credit card buyers.

These stipulations were voided in the US as of 2010 due to the Dodd Frank legislation.

http://www.ftc.gov/business-guidance/resources/new-rules-ele...

> A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously. For example, you can offer your customers a discount or a coupon if they pay with cash or a debit card rather than a credit card.

Re: Is Visa taking 2% out of all my transactions?

#22

Post by lotsofpulp »

Per_Bothner wrote: post #12
andymoe wrote: post #3

Typical credit card transactions fees range from 1.5-3.5 percent so the 2 percent is not a terrible deal and businesses usually just eat it in retail and work it into the prices. Usually there is language in the contract with the processor agreement that prevents businesses from charging different prices for credit card vs non credit card buyers.

"Usually there is language in the contract with the processor agreement that prevents businesses from charging different prices for credit card vs non credit card buyers." I don't believe that is the case. However, they usually prohibit a surcharge for using a credit card - but they don't (can't?) prohibit a discount for cash. To get around that you'll sometimes see "listed price reflects cash discount - add X% if us…

I think Supreme Court came down against those prohibitions in 2017, although I am not sure if that only pertains to state laws and not business agreements.

https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Sch...

Either way, due to wanting to avoid risking anti trust action and to stay out of the headlines, I think the payment card networks (PCN) are not going to want to try imposing any of those credit card surcharge terms.

Re: Is Visa taking 2% out of all my transactions?

#23

Post by lotsofpulp »

junofan wrote: post #10
humanistbot wrote: post #7

Earlier quoted context omitted.

> Like most monopolies the quality and price of service is not actually that good. I can go all around the world with just a single piece of plastic for payment. Some merchants only take local physical currency, but any merchant that has an internet connection can get a device that will securely charge my account in about 5-10 seconds max, automatically converting between local currencies. It is as close to what scie…

The price is hidden, which is kind of uncool.

It has long been up to the merchant to display different prices for credit cards and non credit card payments. No one is stopping them.

Re: Is Visa taking 2% out of all my transactions?

#24

Post by jaclaz »

orbz wrote: post #2

Yep, that’s credit card processing fees. Standard across the industry. See https://www.bankrate.com/finance/credit-cards/merchants-guid... for further info.

It depends on where.

In EU there is IFR that covers almost any debit/credit card transaction capping the interchange rate to 0.2 or 0.3%:

https://en.wikipedia.org/wiki/Interchange_fee

(doesn't apply to corporate cards and to American Express)

Re: Is Visa taking 2% out of all my transactions?

#25

Post by guiambros »

disadvantage wrote: post #9
humanistbot wrote: post #6

Where do you think that 1-1.5% cashback rewards on your credit card come from? It's your cut of their cut.

Cashback rewards are largely worthless and so small as to be negligible IMHO. I can understand the extreme-couponing aspect for people who budget down to the penny, but for me it's basically useless.

> ...extreme-couponing aspect for people who budget down to the penny...

It's the opposite. 1.5% of zero is zero, but 1.5% of a large sum is something material. The cashback credit cards are worth for those who spend a lot of money for it to be worthwhile.

Back of the envelope: $6K per month is $1,000 per month of cashback (or airline miles, points, etc).

Re: Is Visa taking 2% out of all my transactions?

#26

Post by joezydeco »

lotsofpulp wrote: post #23
junofan wrote: post #10

Earlier quoted context omitted.

The price is hidden, which is kind of uncool.

It has long been up to the merchant to display different prices for credit cards and non credit card payments. No one is stopping them.

Although at lot of places ban the display of higher prices for credit use. Which discourages most customers, so they settle for showing a single price and skipping the discussion of a discount. Because why would you offer people a way to pay less?

Re: Is Visa taking 2% out of all my transactions?

#28

Post by gruez »

guiambros wrote: post #25
disadvantage wrote: post #9

Earlier quoted context omitted.

Cashback rewards are largely worthless and so small as to be negligible IMHO. I can understand the extreme-couponing aspect for people who budget down to the penny, but for me it's basically useless.

> ...extreme-couponing aspect for people who budget down to the penny... It's the opposite. 1.5% of zero is zero, but 1.5% of a large sum is something material. The cashback credit cards are worth for those who spend a lot of money for it to be worthwhile. Back of the envelope: $6K per month is $1,000 per month of cashback (or airline miles, points, etc).

>Back of the envelope: $6K per month is $1,000 per month of cashback

Do you have a typo somewhere? $1k of cashback for $6k spend works out to 16.6%, which is very high. $1000 per year is far more reasonable.

Re: Is Visa taking 2% out of all my transactions?

#29

Post by trompetenaccoun »

humanistbot wrote: post #19
toomuchtodo wrote: post #8

Earlier quoted context omitted.

If you want to pay 3% more for that privilege (as a transaction surcharge), I think that’s fine, but others should be able to opt out of the rake when there are suitable instant payment alternatives (which there are in 54 countries, with the US getting instant payments next year). Pushing financial specific ISO messages on a bus should cost cents, not percentages, per transaction (US instant payments will cost $0.045…

Sure. I wasn't saying anything about the price. I was just responding to the statement that the product is not good. The product is great. The price may not be worth it. But lets not pretend like Visa/MC is a substandard product.

How is the product great? It's exactly the same as any other such service. If I didn't look and randomly picked a cc from my wallet I wouldn't even know which card I paid with until I look at the bill.

The fact that Visa and Mastercard have these great margins is entirely down to their duopoly. In a competitive market the fees would be massively lower because it's not actually that expensive running the network. 2%, think about that! With the amount of transactions they do they're printing money. You're paying for this, it's your money and that of every other person, even those who do not use the companies, because the vendors pay the fee. That's the genius part of their model and since most people don't care about finance they don't understand how they're being ripped off.

Re: Is Visa taking 2% out of all my transactions?

#30

Post by [deleted] »

guiambros wrote: post #25
disadvantage wrote: post #9

Earlier quoted context omitted.

Cashback rewards are largely worthless and so small as to be negligible IMHO. I can understand the extreme-couponing aspect for people who budget down to the penny, but for me it's basically useless.

> ...extreme-couponing aspect for people who budget down to the penny... It's the opposite. 1.5% of zero is zero, but 1.5% of a large sum is something material. The cashback credit cards are worth for those who spend a lot of money for it to be worthwhile. Back of the envelope: $6K per month is $1,000 per month of cashback (or airline miles, points, etc).

[deleted]
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